Real Estate

Japan Small Flag Japan

In Japan, our economic and legal system is based on private ownership, and therefore, generally speaking, real estate transactions are not restricted. The real estate and transactions thereof are basically governed by the Civil Code of Japan, and the building and underlying land are subject to separate ownership under the Civil Code.

Portugal Small Flag Portugal

The year 2017 continued to be an excellent year with some major private international players continuing to invest in real estate in Portugal. Investment in retail and offices has increased this year. The considerable liquidity in other countries and the still attractive yields in Portugal makes Portugal an attractive country to invest.

Ireland Small Flag Ireland

The Irish property market continues to perform very strongly with strong international investor demand allied to Irish REIT and institutional demand underpinning performance. Office, retail and hotel investments have been the most active sectors. There has also been an upsurge in development. Office development and student accommodation development has surged in the last 2 years and office rents in prime Dublin are now approaching €60 psf. An acute housing shortage remains. The successful recent IPOs of housebuilders Cairn Homes and Glenveagh Properties is testament to international investor confidence in the returns likely to be generated from this sector over the medium term.

Mexico Small Flag Mexico

Mexico is a civil law jurisdiction, therefore, real estate transactions are subject primarily to the provisions contained in civil statutes. Likewise, Mexico’s federal system is composed of 32 States and several municipalities within each state, as such, federal and local regulations apply to real property matters. In general, real estate transactions are governed by local statutes (eg. Civil Codes of the different States) and many permits fall within the scope of the municipal authorities. However, it is important to note that there is an extensive uniformity among the civil codes and other state related statutes, particularly covering the conveyance of real property. Moreover, Article 27 of the Federal Constitution provides a broad general regime for real estate transactions.

Currently, the real estate market in Mexico offers a wide variety of opportunities for domestic and foreign investors. Increase in funding sources and real estate demand are two of the main reasons for the development of the sector during the last few years. Mexico’s legal framework provide for different financial investment vehicles focused on commercial real estate transactions such as private funds and trusts, as well as capital markets vehicles such as FIBRAs (equivalent to U.S. REITs) and CKDs (please refer to the answer to question 6 for further detail of such vehicles).

The Netherlands Small Flag The Netherlands

This response covers questions regarding commercial real estate in the Netherlands under Dutch law. Dutch law has certain particularities compared with other legal systems, such as Common Law systems. Under Dutch law, for instance, agreements need not be recorded in writing; oral agreements are also binding, with a few exceptions regarding consumer sales. Also, the literal text of the contract is not decisive and restrictions apply to the unilateral termination of negotiations.

Sources of obligations
The law of obligations is regulated in the Dutch Civil Code. Dutch law differs from Common law in that respect. In the latter system the law of obligations is not a separate field of law. The law encoded in the Dutch Civil Code is further interpreted in case law.

Under Dutch law a contract is concluded on the acceptance of an offer. In principle, the agreement need not be recorded in writing. Apart from a few exceptions regarding consumer sales, oral agreements are also binding. An agreement has not only the legal consequences agreed on between the parties, but also those which, in light of the nature of the agreement, follow from the law, custom or the rules of reasonableness and fairness. It is important to realise that a contract may already have been concluded the moment parties reach agreement on the essentials of the contract, without agreeing on all points yet.

Pre-contractual phase
The doctrine of the pre‐contractual phase means that, although it is permitted in principle to terminate negotiations, a party may be obligated to reimburse all or some of the costs incurred by the other party. It is even possible that the negotiations have reached such an advanced stage that they may no longer be terminated because the other party could rely on it that the contract would be signed. Depending on the circumstances, there may even be grounds for reimbursement of the lost profit.

Explanation of obligations
Unlike Common Law, continental legal systems such as the Dutch base the interpretation of a written agreement on the parties’ intentions. In Common Law, if the wording is unambiguous, it is not permitted to depart from its “objective” meaning by interpreting the contract.

In Dutch law the Haviltex rule is applied, whereby significant weight is attributed in interpreting an agreement to the linguistic meaning of its wording, but the parties’ intentions and what they could reasonably expect of each other are decisive.

Choice of law
Contracting parties may stipulate in the agreement by what law it will be governed. It is not possible thereby to exclude provisions of Dutch law that are considered of public order, such as certain aspects of landlord and tenant law.

A bank guarantee is a separate agreement that does not form part of the agreement on the basis of which the bank guarantee is issued. If the parties do not wish the bank guarantee to be governed by the law of the country in which the bank is domiciled, it is advisable to include a choice of law clause. In that case it is also advisable to choose an address for service.

Norway Small Flag Norway

Standard contracts are widely used and accepted as basis for negotiating commercial and legal terms, to a larger extent than what is common internationally. The contracts will more or less reflect market standard regulations, and are updated approximately every second year, due to changes in the legal framework and for incorporation of new market signals. There are standard contracts for both direct acquisition of real estate (asset deals), and for share purchase agreement for share deals of real estate companies. Separate standard contracts for the Norwegian private limited liability company and other company structures that are common in Norway have been developed. Various contract standards for lease agreements have also been prepared, such as for lease of new/used premises, lease of new/used buildings and triple-net lease contracts. For more complex development projects, there is an extended version of the lease contract containing a process for variety orders that is linked to the construction contract.

Compared to international standards for share purchase agreements and lease agreements, Norwegian standard contracts may be considered as quite short and with provisions that seem to open up for discretionary judgement. The background law will supplement the contracts and must be taken into account in order to identify the parties` legal positions. Furthermore, the market practice may be considered more based on an assumption of fair treatment and loyal co-operation than what is common in many other countries. Foreign investors therefore often point out the lack of specification and foreseeability in the wording of the contracts. However, there is a recent development of the Norwegian contracts, where the contracts at least to a certain extent are adopting typical regulations from international lease and M&A agreements.

Romania Small Flag Romania

In a strict legal sense, real estate rights in Romania refer to ownership over land and/or buildings or dismemberments of such ownership (usus, ususfruct, superficies, easement rights, etc.). In a broader sense, it also refers to rights of use over land and buildings, especially in relation to housing, retail or office space leases.

Prior to 1989, the majority of real estate assets were owned by the Romanian State, having been illegally seized or expropriated en-masse by the communist regime, with significant parts of the country’s agricultural lands collectivised.

After Romania’s switch to a market economy, a turbulent time followed as state owned enterprises were privatised and individuals filed claims for restitution of collectivised lands and illegally seized assets, in a climate of constant change and interpretable legislation.

Until Romania’s accession to the EU ownership over land by foreign nationals was restricted. However since 2012 such ownership transfers were in most part liberalised in relation to citizens of EU member states. Transfer of real estate to nationals of non-EU states is still subject to conditions of reciprocity – such reciprocity still has for the most part not been implemented by instruments of international public law.

Beginning 2010 the real estate restitution process has generally settled down and a large part of Romanian real estate is now in the private domain. Such real estate is freely transferable under market conditions between Romanian and EU individuals/legal persons. The legal regime applicable to such transfers has been significantly clarified and stabilised.

Russia Small Flag Russia

  • Real Estate Law and ownership is regulated at the Federal level, so applies equally in all Russian regions.
  • For historical reasons, a lot of the land is publicly owned.
  • Ownership title to land and buildings/ premises is recorded in the Property Registry separately.
  • Under certain conditions, ownership of a building is of greater value/ importance than the landlord’s title to the underlying land; expiry of a land lease does not necessarily mean the tenant has to clean up the site. If the land and building owners fail to come to an agreement, in a deadlock situation to be resolved by the court in favour of one or the other, the key differentiator, as a general rule, if which is of greater value: the land plot or the building.
  • Owners of recorded buildings enjoy exclusive rights to either lease or purchase the public land plot on which those buildings are located without a tender. Expiry of a lease means only that either the lease needs to be extended for a new term or the land needs to be privatised by the building owner.

Sweden Small Flag Sweden

Real estate law in Sweden is essentially based on statutory law with interpretive influences from case law.

All Swedish land is divided into independent property units (Sw. fastigheter), all registered in a central cadastral register. A Swedish real property is traditionally a two-dimensional unit including all the land below ground within its boundaries and the air space above it. Since 2004, three-dimensional property units may also be created, allowing buildings or parts of buildings to become separate, transferrable properties within one two-dimensional ground unit.

For a property transfer agreement to be legally binding under Swedish law, certain formal requirements must be fulfilled. Requirements include written form, signature from both parties, a clear declaration of transfer, statement of purchase price and any conditions precedent. It is possible to transfer only a part of an existing property, such purchase will however become null and void unless sufficient parcelling measures in order to separate the purchased land from the original property are applied for within six months from the purchase and subsequently implemented. As a consequence of the formal requirements on real estate transfers, options on real estate acquisitions are not legally binding under Swedish law.

Lease law in Sweden is quite extensively regulated in statutory law, under provisions which essentially are mandatory to the benefit of the tenant. Swedish lease law includes provisions granting tenants a right to prolongation at the expiration of a lease term, sanctioned by an obligation for landlords to pay full damages if prolongation is denied (unless specifically prescribed exceptions to the general rule are at hand).

From an international perspective, the Swedish real estate legal system is relatively well-organized, predictable and transparent, and generally provides a relatively stable legal platform for investors. Some uncertainty is however apparent with respect to possible legislative changes in the real estate tax regime, this is commented more extensively below.

Switzerland Small Flag Switzerland

The Swiss Confederation consists of 26 Cantons.

Each Canton is responsible for operating its own land registry(ies) under the ultimate surveillance of the Confederation. Each Canton has one or several land registries together covering the entire territory of such Canton. Any real estate in Switzerland, more specifically any plot of land and any right in rem on such real estate, is registered with the competent land registry where the real estate is located. Only public domains, such as roads, highways, etc., may not be registered at the land registry.

All possible rights in rem under Swiss law, such as ownership, easement, encumbrance or lien, are exhaustively provided by the Swiss Civil Code.

Turkey Small Flag Turkey

Real estate sector is one of the leading sectors in Turkey. Not only the houses but also the malls, offices, hotels and industrial constructions are playing a significant role within the growth of the real estate sector. Strategically situated at the crossroads of Europe, the Middle East, and Central Asia, and home to almost 80 million people, Turkey offers great opportunities for real estate developers and investors by combining a large construction sector with growing commercial and industrial output. Since the government was aware of this potential, it encouraged foreign and local investors to invest in real estate and tried to make the life easier for them. The enactment of the reciprocity law, the urban renewal projects, the tax advantages etc. are tools the government has offered. In this respect, it is expected the real estate sector in Turkey to grow faster in the next years and will be an attraction centre for foreigners all around the world.

Brazil Small Flag Brazil

In Brazil, a number of sparse formalities and laws (statutes) governs the real estate industry, mainly because any matter in connection with real estate ownership, guarantee on real properties and related rights in general is deemed to be in rem rights. Nevertheless, it is also possible to have legal relations and transactions involving a real property in the scope of obligation law, as opposed to in rem rights, as it occurs with leases and free leases for real property’s use.

In any case, in order to seek for the applicable law and check the formalities that will have to be adopted to validate the transaction, it is always important to take into consideration the kind of transaction intended, as well as the bounds established with such property. This includes the possibility of registering the property in the corresponding real estate record thereof (i.e., a public registration containing the main information and track record of the property, as explained below) with the competent Real Estate Registry Office.

United States Small Flag United States

The U.S. Constitution sets forth a system of federalism where governmental power is divided between the national (or federal) government and the governments of individual states. Each state also has its own constitution, which further divides governmental power between the state and local governments. For this reason, legislation affecting the acquisition, disposition, use, financing, and taxation of real estate can be found at each of the national, state, and local levels of government.

Each state in the U.S., other than Louisiana (which employs a civil law system), follows a common law regime which evolves through both case law (e.g., court decisions) and legislation, and laws can vary greatly from state to state. In following the common law tradition, U.S. courts generally allow parties engaging in transactions relating to commercial real estate the freedom to set the terms of those transactions by contract, subject to regulations relating to the public interest (e.g., environmental, tax, counter-terrorism).

United Kingdom Small Flag United Kingdom

The United Kingdom of Great Britain and Northern Ireland (commonly described as the "UK") comprises the kingdoms of England, Wales, Scotland and Northern Ireland. England and Wales share the same real estate law and registrations system. Scotland and Northern Ireland have their own real estate law and registrations systems. Our answers to the questions in this Guide are limited to the English and Welsh system.

English and Welsh real estate law is a patchwork of:

  • practical legislation governing, for example, the registration of real estate at the English and Welsh Land Registry;
  • legislation aimed at addressing perceived market abuses and other political or social issues of the day;
  • medieval concepts of tenure; and
  • complex and often very old case law (i.e. court decisions).

Despite attempts to modernise and consolidate the law, English and Welsh real estate law remains full of seemingly anachronistic rules and many traps for the unwary.

In the last 20 years there has been a governmental drive to ensure that ownership of most of the land and other estate interests (e.g. leases and mortgages) in the UK are registered on a publicly available governmental register. More than 80% of land in England and Wales is now registered at the English and Welsh Land Registry.

The historic nature of much of English and Welsh real estate law means that relatively little of the legislation (outside of planning, environmental and health and safety etc.) derives out of or from European legislation and therefore the legal impact of Brexit is likely to be limited.

Bulgaria Small Flag Bulgaria

Bulgarian law recognizes sole and co-ownership over real estate, as well as different types of limited rights in rem. Real estate can be hold by natural and legal persons, private citizens and public entities, the municipality and the state. Local natural and legal persons may acquire all types of property with exception of those, owned exclusively by the state or the municipality as public property and in public interest.

Establishment and transfer of in rem rights are generally effectuated by a notary deed, which is executed by a duly qualified Notary public authorised to act within the area, where the property is located. Other title documents may be administrative acts for property, judicial acts, notarized contracts, etc. All title documents are subject to mandatory entry into the Land register. Any encumbrances, liens and third party rights are also entered into the Land register.

The material norms regulating the real estate regime in Bulgaria are spread out in various legislative acts - Bulgarian Constitution, Property Act, State Property Act, Municipal Property Act, Agricultural Land Ownership and Use Act, Forestry Act, Civil Procedures Code. The regulation also contains a system of different claims, available to owners and holders of in rem rights, for the protection of their interests.

France Small Flag France

Commercial real estate transfer and renting are both strongly regulated in France in order to ensure proper protection of the ownership of both the property and the business operated within.

Germany Small Flag Germany

The Federal Republic of Germany consists of sixteen states (Laender) each of them being subject to individual state legislation plus the federal legislator. As a consequence, German real estate law mainly has the following different sources:

  • Civil law: The regulations regarding the ownership and transfer of real estate, mortgages, encumbrances etc. and the contractual aspects of construction, leases, purchase and sale can be found in the German civil code which can be considered as the main source for civil real estate laws in Germany, which is subject to the competence of the federal legislator. German Civil Law is mainly based on the German Civil Code (BGB) and it is applicable in the whole Federal Republic of Germany.
  • Federal public law: The federal legislator also has the competence in the area of planning law. Hence public planning law is applicable all over Germany.
  • Public law of the states (Laender): Each of the 16 German states has the competence regarding building law, as a result sixteen different building laws are in place in Germany. The applicable building law for a piece of real estate is the state, where the real estate is located,.
  • Public law of the European Union: The legislation of the EU has impact on the German real estate law, albeit in a narrow ambit (safety of buildings, planning and environment are the most important topics)
  • Last, but not least there are various taxes applicable to German Real Estate which are based on federal and state tax laws.

The German Civil Code (BGB) has come into effect as of on 01.01.1900 and has seen just one major reform. Especially in the area of ownership it has strong influences of Roman law.

The written law is the main source of German real estate law, however court decisions may have influence to the interpretation of those sources. Nevertheless court decisions are not binding, since the concept of stare decisis is not enshrined in the German law system.

Hong Kong Small Flag Hong Kong

All land in Hong Kong (with the exception of St. John's Cathedral, the only freehold property in Hong Kong) is leasehold property. The government leases the land for a term of years with covenants and conditions imposed on the grantee. Previously, the government as lessor would issue a Government Lease to the purchaser (usually a developer) (as the lessee). The current practice now is that the government usually executes Conditions of Sale, Grant, Re-grant or Extensions depending on the purpose of grant. Once the conditions stipulated therein are complied, the Conditions of Sale or Grant will convert into a form of legal ownership to the purchaser. Before 1997, the lease terms were in general 75 and 99 years renewable for a further 75 years or 99 years. Some lease terms were even 999 years. After 1997, new lease terms were in general 50 years from the date of grant. Government rent is payable on land and the sum is equivalent to 3% of the rateable value of the property on the land leased. Given Hong Kong's limited supply of land, real estate is usually developed in form of multi-storey buildings, whether for residential, commercial, industrial or other purposes. Under this system, the entire land and building is notionally divided into a number of undivided shares which are allocated to different premises. Owners buying commercial real estate will therefore own a number of undivided shares in the land together with the exclusive right to occupy the premises and their interests will usually be governed by a Deed of Mutual Covenant.

Spain Small Flag Spain

Spain is a parliamentary monarchy, based on a social representative, democratic and constitutional regime. The head of the state is the Monarch, while the Prime Minister is the head of the Government which is composed of the Ministers who collectively form the Council of Ministers.

Spain has a highly decentralised system of administration with 17 Autonomous Communities or Regions and two autonomous cities, each based on a parliamentary system, in which executive power is vested in a Council of Ministers, headed by a president, elected by and responsible to a unicameral legislative assembly.

Most of the Autonomous Communities have their own regulations affecting real estate matters to a different extent (contractual rules, planning laws, environmental regulations, etc.).

Our answers to the questions in this Guide are limited to the regulations passed by the Spanish Parliament.

Nigeria Small Flag Nigeria

There are several sources of land laws and regulations that set out the guiding principles for land ownership, acquisition and alienation in Nigeria. One of the main and the earliest sources is customary law, which is largely unwritten and varies from one community to another. It emanated from the usage and practices of the Nigerian people in their various communities and governed the indigenous system of land holding in Nigeria until the introduction of English law/statutes. The relevant customary law is recognised and implemented as binding land regulation provided it is not contrary to natural justice, equity and good conscience; and so long as it does not directly or indirectly contradict any applicable law that is currently in force. Due to its (flexible and unwritten) nature, it must be proven before the court as the acceptable law governing a land matter in the event of a dispute.

Presently, the principal legislation that regulates land ownership, acquisition and alienation in Nigeria is the Land Use Act, chapter L5, Laws of the Federation of Nigeria (“LFN”) 2004 (the “LUA”), a federal law with nationwide application, which radically altered the land tenure system in Nigeria. A fundamental change introduced by the LUA is that with effect from 29th March 1978 (i.e. the commencement date of the LUA) title to real property in Nigeria ceased to be absolute or perpetual in nature. The LUA vests all land except land held by the Federal Government within the territory of each State of the Federation of Nigeria in the Governor of that state, thereby giving the Governor absolute title to land within his state. The Governor of each state holds the land in his state in trust for the people and administers it for the use and common benefit of all Nigerians. In the case of the Federal Capital Territory, Abuja, ownership of land is vested in the President of Nigeria (represented by the Minister of the Federal Capital Territory). Regarding land held by the Federal Government in various states of the federation (that are deemed to be federal land), the power to deal with those properties is vested in the Federal Government or the relevant ministry or agency.

Updated: January 25, 2018